July 2013 Economy Updates - Gr8AmbitionZ

7/30/2019 July 2013 Economy Updates - Gr8AmbitionZ

1/16

July 2013

Current Affairs

Economy Updates

(specially for I B P S andRB I Exams)

Powered by

www.Gr8AmbitionZ .com

yourA toZ competitiveexamguide


2/16

For m or e m ater ia ls visi t u s atwww .G r8Am bi t ionZ.com

1Cur r en t A f f air s Econom y Ju ly 20 13

il and Natural Gas Corp (ONGC) on 2 July, has lost the giant Kashagan oilfield to the Chinese

after Kazakhstan blocked its $5-

billion deal to buy U.S. energy major

ConocoPhillips stake in the Caspian Sea

oilfield.ONGC Videsh, the overseas

investment arm of ONGC, had, in November

last, struck a deal to buy ConocoPhillips 8.4

per cent stake in Kazakhstans biggest

oilfield, Kashagan for $5 billion.

he focus of this years GII makes it a valuable guide for

the policy makers to develop specific strategies relevant

to their local innovation eco-system, said CII Director General

Chandrajit Banerjee. India ranked 1st in the Central and South

Asia region followed by Kazakhstan and Sri Lanka, and 11th

overall in innovation efficiency ratio. (Innovation efficiency

reflects the innovation output per unit of innovation input in

the economy).India ranked poor in areas such as political

stability (rank 123), ease of starting business (rank 128)

knowledge absorption (rank 122) among others. As per the

report, despite the economic crisis, innovation is alive and well.

ndia has ranked 66th in the Global Innovation Index (GII) 2013, an index that is published by

Cornell University, INSEAD, World Intellectual Property Organization (WIPO) and the

Confederation of Indian Industry (CII) as a knowledge partner. The study ranked 142 economies

across the world on their innovation capacity and efficiency. This years report casts additional light

on the local dynamics of innovation, an area which has remained under-measured globally.

O

T

I


3/16



It shows the emergence of original innovation

eco-systems, and signals a needed shift from the

usual tendency to try and duplicate previously

successful initiatives, CII said in a statement.

The local dynamics of innovation varies across

the globe and influences innovation

measurement. Learning from the local

innovation systems adds newer dimensions to

existing measurement approaches.

he Oil India Ltd. (OIL) plans to tie-up with the Assam government to start a co-operative dairybusiness along the lines of Gujarats successful Amul model. The project named Kamdhenu

envisages setting up of a milk production facility in Upper Assam to establish the dairy business in 3-5

years, OIL said inj Guwahati on 2

July.Assam is a milk-deficient state.

Availability of good milk is a big issue here.

So, as part of our corporate social

responsibility, we have decided to join hands with the state government to start a co-operative dairy

business here, OIL Chairman and Managing Director Sunil Kumar Srivastava told reporters.

The model and OILs role are being studied to see how the company can support it. We are an oil

company and milk production is not our business. We will tie-up with the government and see how

we can implement this plan, Mr. Srivastava said. The company was assessing options such as giving

cows to farmers in villages, setting up collection centers, and establishing a distribution network, he

said. The co-operative might supply milk to the entire North East in future, he said. OIL has started

the ground work for the project, and has initiated talks with the Assam government.

he National Cyber Policy in order to create a secure cyber ecosystem has planned to set-up a

National Nodal Agency to coordinate all matters related to cyber security in the country. The

nodal agency has clearly defined roles and responsibilities. The policy will also establish a mechanism

for sharing information as well as identifying and responding to cyber security incidents and for

T

T


4/16



cooperation in restoration efforts. The National Cyber Security Policy has been prepared in

consultation with all relevant stakeholders, user entities and public.

he Telecom Commission has approved the enhancement of the foreign direct investment (FDI)

limit in the telecom sector

from 74 per cent to 100 per cent on 2

July. The Telecom Commissions

decision will now be submitted to the

Union Cabinet for its approval. The

move comes on the eve of Finance

Minister P. Chidambarams visit to

the U.S. on July 11, followed by the

Telecom Minister Kapil Sibals week-

long visit to the U.S. starting July 15.

The announcement also comes on the heels of new balance of payment challenges; with the rupee at

an all-time low of nearlyRs. 60 per one US dollar. The announcement has multiple implications for

India. Mr. Sibal said in a statement that, he expected the move to reenergize the telecom industry out

of its legacy debt issues by bringing in at least $10-15 billion of FDI. By improving connectivity

through the highest quality of connectivity and competition, it will further empower the aam aadmi of

the country in a meaningful manner, Mr. Sibal said. He further asserted that security concerns

surrounding telecom networks would also be addressed with a firm hand.

he Union Government of India on 1

July 2013 launched the National

Cyber Security Policy 2013 at New Delhi with

an aim to protect information and build

capabilities to prevent cyber attacks. The

National Cyber Security Policy 2013 to

safeguard both physical and business assets of

T

T


5/16



the country. The Policy has outlined the roadmap for creation of a framework for comprehensive,

collaborative and collective responsibility to deal with cyber security of the country.

The policy has ambitious plans for rapid social transformation and inclusive growth and India's

prominent role in the IT global market. It will cater to the cyber security requirements of government

and non-government entities at the national and international levels. The policy will help in

safeguarding the critical infrastructure like Air Defense system, nuclear plants, banking system,

power infrastructure, telecommunication system and many more to secure country's economic

stability.

oftware giant TCS has replaced its group firm Tata Steel as the country's most admired company,

as per a Fortune list released on 9th July. TCS is followed by Hindustan Unilever, ITC, Infosys

and SBI in the top-five, while last year's top-ranked firm Tata Steel has slipped to seventh

position in the list of India's 50 most admired companies. Both ITC and Infosys have shared the third

spot. The rankings have taken into account various factors such as corporate governance,

innovativeness, corporate social responsibility and leadership. There are a total of four Tata group

companies on the list. Besides Tata Consultancy Services (TCS) and Tata Steel, other Tata group firms

in the list are Tata Motors at the 12th spot and Tata Power at 50th. As many as ten public sector units

(PSUs) have made it to the rankings, global business magazine Fortune's Indian edition said. Among

state-run enterprises, SBI and ONGC are in the top ten, ranked at fifth and eighth positions,

respectively. L&T (6th rank), Maruti Suzuki (9th) and ICICI Bank (10th) feature in the top ten. State-

run oil major Indian Oil Corp was placed at 11th rank, while SAIL (22nd), Bharat Petroleum (25th),

NTPC (28th), HPCL (31st), GAIL (34th), ONGC Videsh (47th) and Coal India (48th) also made the

cut. Other companies who made it to the list include Microsoft India (15th), Colgate Palmolive (16th),

IBM India (17th), Samsung India Electronics (18th), Bharti Airtel (19th), Cadbury (23rd), Dell India

(32nd), Siemens (36th), Intel India (38th), Nokia India (42nd) and Sony India (44th).

he Cabinet Committee on Economic Affairs (CCEA), on 10th July, has approved the Modified

Industrial Infrastructure Upgradation Scheme (MIIUS) with an approved outlay of Rs. 1030

crore for the 12th Five Year Plan period consisting of Rs. 450 crore for committed liability and

the remaining Rs. 580 crore for taking up 14 to16 new projects including a minimum 2 projects in the

North Eastern Region (NER) for up gradation of infrastructure in existing or Greenfield industrial

clusters. The CCEA further approved that at least 10 percent outlay will be set aside for the minimum

two projects in the NER. All States are covered under the scheme. However projects are likely to be

S

T


6/16



undertaken in only 14 to 16 States/Districts due to limitation of outlay in the 12th Plan. After

notification of the MIIUS, the

Project Management Agency

(PMA) would be appointed. The

IIUS was launched in 2003 as a

Central Sector Scheme to

enhance competitiveness of

industry by providing quality

infrastructure through a public

private partnership in selected

functional clusters with central

assistance up to 75 percent ofthe project cost subject to a

ceiling of Rs. 5 crore. The Scheme

was recast in February, 2009 based on the recommendation of an independent evaluation.

he Cabinet Committee on Economic Affairs (CCEA) on 10 July, approved disinvestment of

government stake in State Trading Corporation (STC) and India Tourism Development

Corporation (ITDC), which would fetch around Rs 30 crore to the exchequer. The Disinvestment

Department had sought Cabinet nod to offload 5 per cent stake in ITDC and 1.02 per cent in STC

through the Offer For Sale (OFS) route. The government expects the sale of 5 per cent stake or 42.88

crore shares in ITDC to fetch Rs 23.58 crore. Besides, it aims to garner about Rs. 10 crore through

disinvestment of 1.02 per cent, or 6.13 crore shares, in STC. Government currently holds 92.11 per

cent stake in ITDC and 91.02 per cent stake in STC. The stake sale would help both the companies

meet the minimum 10 per cent public holding norm of market regulator Securities and Exchange

Board of India (SEBI). The government is required to bring down its stake in these two companies to

90 per cent by August 8.

T


7/16



he government cleared a proposal to replace Directorate General of Civil Aviation (DGCA) with a

new aviation regulator with full operational and financial autonomy on 11th July. The new

regulatory body would be called the Civil Aviation Authority (CAA) and it would replace the DGCA. It

will administer and regulate civil aviation safety and manage safety

oversight over air transport operators, air service navigation

operators and operators of other civil aviation facilities.

The DGCA had limited delegation of financial

powers and hence was incapable of making

adequate structural changes to meet the

demands of a dynamic civil aviation sector. This

necessitated its replacement with CAA

that would have more administrative andfinancial powers to deal with the fast-changing

aviation scenario.CAA, like DGCA, would also deal with

matters relating to financial stress on safety of air operations, as

witnessed in connection with the bankrupt Kingfisher Airlines in October last year.CAA is being

established to meet the standards set by UNs International Civil Aviation Organization (ICAO) and in

line with aviation regulators in other countries like the Federal Aviation Administration of the US and

the UKs CAA.

conomic ties between India and Vietnam are on track and may cross $7 billion by 2015, External

Affairs Minister Salman Khurshid said on 11 July. Speaking to the media after the 15th meeting

of the India-Vietnam Joint

Commission, the Minister said

investments by Indian companies

total about $936 million in 86

projects in sectors such as oil and

gas exploration, mineral

exploration and processing,

sugar manufacturing, agro-

chemicals, IT, and agricultural processing.

T

E


8/16



Khurshid said Vietnam had recently chosen Tata Power as the developer for a $1.8-billion 2X660 MW

Long Phu 2 Thermal Power Project in Soc Trang province in southern Vietnam, despite strong

competition from Korean and Russian companies. It will be the single largest Indian investment in

Vietnam when it comes through and will enhance our economic co-operation and strategic

partnership. The MoU between the two central banks Reserve Bank of India and the State Bank of

Vietnam signed in 2012, will enable Bank of India and Indian Overseas Bank to upgrade their

representative offices that they opened in Ho Chi Minh City in February 2003 and March 2008,

respectively, into full-fledged branches in the near future, Khurshid said. India has extended 17

letters of credit (LoCs) totaling $164.5 million, including a $19.5-million LoC for setting up Nam Trai-

IV hydropower project and Binh Bo Pumping station, which was signed on 11 July. India has also

agreed to consider earmarking $100 million under buyers credit under the National Export

Insurance Account for use by Vietnam.

atyam formally merged with Tech Mahindra on 15th July. After debuting on the stock market in

1995, Satyam soon went on to become one of the country's top five IT companies and its share

price was trading Rs. 250 level in late 2008. It came to be known by January 2009 that Satyam was

home to India's biggest ever corporate scam. Satyam is a Sanskrit word that means truth.

A quick revival, however, followed with its takeover by Tech Mahindra through a government-monitored auction process and its name was changed to Mahindra Satyam. Tech Mahindra on 12 July

2013 announced the completion of allocation of its shares to the shareholders of Satyam Computer

Services, raising the issued capital of the firm from 129 million shares to 232 million.

Many changes have come through under Mahindras and the group finally decided to amalgamate the

two IT companies under its fold. Shares of Mahindra Satyam are no longer traded on the bourses.

They last traded at a level close to 120 rupees a piece and the value of each erstwhile Satyam share is

now equivalent to about 130 rupees a piece, taking into account Tech Mahindra's current share price

of 1120 rupees.

As per the merger ratio, two Tech Mahindra shares have been given for every 17 shares held by

Satyam investors. Experts say it made sense for the new owner to drop the Satyam brand name from

the business, given its infamous past. Following the integration, Tech Mahindra is now amongst the

S


9/16



top-5 IT companies of India with revenues of 2.7 billion US dollars and expects it to rise to 5 billion

US dollars by 2015. The integration of two entities makes it a much larger software company and will

also aid in cracking and winning larger outsourcing contracts.

low progress of economic reforms is expected to pull down India's growth to 5.8 per cent in the

2013 calendar year from 6 per cent projected earlier, an Asian Development Bank (ADB) report

said on 16th July. "In India...slow progress in pushing through the reforms needed to ease business

bottlenecks means growth is likely to be 5.8 per cent this year, slower than the previously forecast 6.0

per cent," the report 'Asian Development Outlook Supplement' said.

he Reserve Bank of India (RBI) opened a special liquidity window for commercial banks to meet

the cash requirements of mutual funds (MFs) on 17th July. The special liquidity window was

opened taken into concern the Mutual Funds which faced heavy redemption pressure in debt-oriented

MF schemes following a series of steps taken by the RBI to shore up the faltering currency.Keeping all

this into consideration the RBI opened a special three-day repo window that will allow banks to

borrow a total of 25000 crore Rupees at a rate of 10.25%. Banks can borrow this money to lend

onwards to MFs. RBI will conduct the first repo auction under the special facility on 19 July 2013.The

second auction is scheduled for 23 July 2013 and the subsequent operations at an interval of three

days. Individual banks will be allocated funds in proportion to their bids, subject to the overall ceiling

of 25000 crore, Rupees. The RBI is also planning to sell bonds worth 12000 crore Rupees in the

secondary market on 18 July 2013 for another liquidity draining measure.

he Reserve Bank of India (RBI), on 15 July, penalized 22 banks by imposing fines for violating

Know-Your-Customer (KYC) norms and anti-money laundering guidelines. The list includes

banks such as SBI, Bank of Baroda and Canara Bank all of whom were fined Rs.3 crore each. The RBI

said that it came to the conclusion that some of the violations were substantiated and warranted

imposition of monetary penalty. The central bank also issued cautionary letters to seven other

banks including Citibank, Standard Chartered and Barclays as no violation of serious nature by them

was established. The violations by the public sector banks were revealed in a sting operation by online

S

T

T


10/16



portal, Cobra post, reported in May. Though it imposed penalties, the RBI said that its investigation

did not reveal any prima facie evidence of money laundering. Any conclusive inference in this regard

can be drawn only by an end to end investigation of the transactions by tax and enforcement agencies,

the central bank statement said.


11/16



overnment of India signed an agreement with Asian Development Bank (ADB) on 19 July, for a

$60 million loan for improving urban services and strengthen municipal and project

management capacity in several towns in North Karnataka. The agreement is for the 3rd Project

under the overall facility of $270 million for the North Karnataka Urban Sector Investment Program

(NKUSIP).

The third tranche loan under the North Karnataka Urban Sector Investment Program will develop

sewerage networks in six towns, and help the rehabilitation and expansion of potable water systems in

two more towns. More than 100,000 households will benefit from the improvements. Nilaya Mitash,

Joint Secretary, Department of Economic Affairs, Ministry of Finance signed the agreement on behalf

of Government of India and Mr. Hun Kim, Country Director of ADBs India Resident Mission, signed

the agreement on behalf of ADB. ADB, based in Manila, is dedicated to reducing poverty in Asia and

the Pacific through inclusive economic growth, environmentally sustainable growth and regional

integration. Established in 1966, it is owned by 67 members 48 from the region. In 2012, ADB

assistance totaled $21.6 billion, including co-financing of $8.3 billion.

he Cabinet on 17th July approved amendment to the SEBI Act, which is expected to arm the

stock market regulator Securities and Exchanges Board of India (SEBI) to crack down on

collective investment schemes such as the Saradha scam in West Bengal.

The Cabinet had given the nod to the proposal

to provide powers to market regulator to help

investigate and punish fly-by night operators of

p. SEBI will be able to summon any person or

entity to assist in an investigation into a chit

fund or a para-banking operation. It also

provides powers to the stock market regulator

to undertake "search and seizure" operations

and help them access call records.

G

T


12/16



"This will enhance regulation of collective investment schemes," said a senior government official.

The changes in the Act are also likely to plug regulatory loopholes and clearly detail the jurisdiction of

the stock market regulator on such schemes.

SEBI will be able to impose "disgorgement orders" on a company that defaults on its commitments or

makes illegal gains. The regulator will use its "inherent powers" to recover ill-gotten gains that will

then be utilized to promote "investor protection and education".

n yet another step to contain the current account deficit, the Reserve Bank of India imposed

restrictions on gold imports by banks and other authorized agencies on 22nd July. As per the new

norms, all banks and authorized agencies will have to ensure that at least 20 per cent of the imported

gold is made available for exports and a similar amount is retained with the customs. "It shall be

incumbent on all nominated banks/nominated agencies to ensure that at least one fifth of every lot of

import of gold (in any form/purity including import of gold coins/dore) is exclusively made available

for the purpose of export," the RBI said in a notification.

It further added that such imports should be linked to financing of exporters by the nominated

agencies. The banks and other entities will also be required to retain 20 per cent of the imported

quantity of the gold in customs bonded warehouses. The restrictions are meant to contain gold

imports, which in addition to oil, is putting pressure on the current account deficit that soared to a

record high of 4.8 per cent in 2012-13. The RBI and the government had earlier imposed other

restrictions on import of gold to check CAD.

n a major upgrade of powers given to SEBI, the government has allowed it to pass orders like

search and seizure, attachment of properties, arrest and detention of defaulters and pass

disgorgement directions to recover the wrongful gains made in contravention of laws.At the sametime, the government has also allowed the market regulator to seek information from other regulators

within India and abroad with retrospective effect, paving way for collection of details pertaining to

cases pending for over 15 years now

I

I


13/16



In another retrospective change, which forms part of the Securities Laws Amendment Ordinance

promulgated by the President of India last week, the individuals and companies being probed by SEBI

can settle their pending investigations. Such settlements can be undertaken in cases that are currently

pending for more than six years.

o tackle the growing menace of ponzi schemes being floated as Collective Investment Schemes

(CIS), the rules have also been amended to classify any money collection of Rs. 100 crore or

more as CIS operation. SEBI has been given powers to crack down on illegal investment schemes

floated by individuals as well, as against companies only as of now. However, all government-notified

schemes would be out of the Collective Investment Scheme framework.

The changes are part of as many as 22 amendments made by the government in three main Acts

governing SEBI and its operations -- the Securities and Exchange Board of India (SEBI) Act, the

Securities Contracts Regulation Act (SCRA) and the Depositories Act -- through a 16-page Ordinance.

Among others, SEBI has also been given powers to pass disgorgement orders for amount equivalent

to wrongful gains or to losses averted by contravention of regulations.

Besides, the regulator can now enter and search buildings, places, vessels, vehicles and aircraft of

defaulters. Its officers can also break open the lock of any door, box, locker, safe almirah, etc to get

information from suspected entities. At the same time, the defaulters can seek settlement of pending

cases with SEBI with retrospective effect from April 20, 2012.

roviding a big boost to the power sector, Coal India Limited (CIL) on 26 July, has signed 82

FSAs as on 25 July, 2013, with power stations with a

capacity of 34,793 MW. This includes 16 power stations

belonging to NTPC and its Joint Venture companies (JVs). 11

more FSAs are ready to be signed shortly with NTPC or its

JVs, while another 23 FSAs with State and private sector

entities are in the pipeline. These FSAs were part of the 131

FSAs for a capacity of 60,678 MW which CIL was directed to

sign in February, 2012. This will substantially increase the

power generation during the current and subsequent years. In yet another fillip to the power sector,

T

P


14/16



Ministry of Coal has issued another Presidential Directive to CIL on 17.07.2013 for signing of FSAs for

a capacity of 78,000 MW instead of the earlier 60,678 MW. This will not only increase the power

generation further but will also fast track several power projects which are under development.

s part of its CSR initiative, Rural Electrification Corporation (REC), a Central Public Sector

Enterprise under the Ministry of Power, has committed financial assistance to provide free one

year residential JEE/IIT coaching and mentoring 20 underprivileged meritorious students from

Chhattisgarh, Odisha, Bihar, J&K and Delhi under the 'Abhayanand Super 30' initiative. Inaugurating

the Delhi chapter of the 'National Super 100' programme on 18 July, Rajeev Sharma, CMD, REC,

hoped that the Programme will help the aspiring students to successfully compete and gain admission

in prestigious engineering colleges of the country. This initiative, co-founded by Shri Abhayanand,presently Director General of Police, Bihar, for providing free coaching to 30 students of Bihar, has

achieved high success rates, and over the years, has expanded to become the 'National Super 100', by

providing coaching to 100 students from underprivileged sections of society in seven centres across

the country, with the vision of transforming the lives of deserving children with little or no means.

The selection of the students is done through transparent procedure.

overty ratio in the country has declined to 21.9 per cent in 2011-12 from 37.2 per cent in 2004-

05 on account of increase in per capita consumption, said the Planning Commission. According

to the Commission, in 2011-12 for rural areas, the national poverty line by using the Tendulkar

methodology is estimated at Rs. 816 per capita per month in villages and Rs. 1,000 per capita per

month in cities. This would mean that the persons whose consumption of goods and services exceed

Rs. 33.33 in cities and Rs. 27.20 per capita per day in villages are not poor.

The Commission said that for a family of five, the all India poverty line in terms of consumption

expenditure would amount to Rs. 4,080 per month in rural areas and Rs. 5,000 per month in urban

areas. The poverty line however will vary from state to state. The percentage of persons below poverty

line in 2011-12 has been estimated at 25.7 per cent in rural areas, 13.7 per cent in urban areas and 21.9

per cent for the country as a whole, a Commissions press statement said. The percentage of persons

below poverty line in 2004-05 was 41.8 per cent in rural areas, 25.7 per cent in cities and 37.2 per cent

in the country as a whole.

A

P


15/16



In actual terms, there were 26.93 crore people below poverty line in 2011-12 as compared to 40.71

crore in 2004-05.This ratio for 2011-12 is based on the methodology suggested by Suresh Tendulkar

Committee which factors in money spent on health and education besides calorie intake to fix a

poverty line. The Commission said the decline in poverty is mainly on account of rising real per capita

consumption figures which are based on 68th round of National Sample Survey on Household

Consumer Expenditure in India in 2011-12. Earlier, a committee was appointed under Prime

Ministers Economic Advisory Council Chairman C Rangarajan to revisit the Tendulkar Committee

methodology for tabulating poverty. The Committee is expected to submit its report by mid 2014.

State-wise, the Commission said the poverty ratio was highest in Chhattisgarh at 39.93 per cent

followed by Jharkhand (36.96%), Manipur (36.89%), Arunachal Pradesh (34.67%) and Bihar

(33.47%). Among the union territories, the Dadra and Nagar Haveli was the highest, with 39.31 per

cent people living below poverty line followed by Chandigarh at 21.81 per cent. Goa has the least

percentage of people living below poverty line at 5.09 per cent followed by Kerala (7.05%), Himachal

Pradesh (8.06%), Sikkim (8.19%), Punjab (8.26%) and Andhra Pradesh (9.20%).

ndia achieved a record production of 18.45 million tones of pulses in the 2012-13 crop year ended

June 2013. This augurs well for the country which is dependent on imports to meet the shortfall of

around 3 to 4 million tones. Higher support price prompted farmers to grow pulses. According to the4th advance estimates released, overall food grain production is projected at 255.36 million tones,

which is lower than the

record 259.29 million

tones achieved in the

previous crop year. In

food grains category, rice

production has been

revised upward to 104.4

million tones from

104.22 million tones and coarse cereals to 40.06 million tones from 39.52 million tones in the third

estimates. However, wheat output has been revised downward to 92.46 million tones from 93.62

million tones.

I


16/16

We a r e a t Fa cebook

Dont forget to LIKE us there

for Daily Updates

www .facebook.com /Gr8Ambit ionZ

Documents

July 2013 Economy Updates - Gr8AmbitionZ